CURRENT AFFAIRS-4

INDIAN ECONOMY
 Q1. With referenceto the`Nobel prize for economics 2022’, which of the
statements given below is/are correct?
1. It has been awarded to three US-based economists-Ben S Bernanke ,Douglas W
Diamond and Philip H Dybvig.
2. Their work significantly improved the understanding of the role of banks in
the economy, particularly during financial crises.
Select the correct answer using the code given below.
(a) Only 1 (b) Only 2
(c) Both 1 and 2 (d) Neither 1 nor 2
Q2. India's first International Indian Bullion Exchange is located in which of the
following cities of India?
(a) Delhi
(b)Mumbai
(c) Gandhinagar
(d)Pune
India's first International
Indian Bullion Exchange
(IIBX)
Context - The IIBX has been recently opened at the Gujarat International
Finance Tech City (GIFT) - International Financial Services Centre.

What will be the function of the bullion exchange?

• All bullion imports into India for domestic use will be channelized through
IIBX.
• Qualified jewellers with net worth of Rs. 25 crore and earning 95%
of their revenue from jewellery, and NRIs with a net worth of
$500,000 can trade at
IIBX.
• The platform will provide efficient price discovery and quality assurance, and enable
greater integration with other segments of financial markets.
• The larger goal is to establish India as a dominant gold player in the world.
What was the need for setting up IIBX?
• Currently, Indian jewellers and dealers need to use the services of
RBI authorised banks and nominated agencies to import gold.
• But not all jewellers can access these channels, impacting the quality of gold.

• India's gems and jewellery industry is about Rs. 7 trillion, and 90-95% of it is

made up of micro, small and medium enterprises.

• According to the SEBI, despite being second only to China in gold

consumption, India has no significant role in influencing its pricing.

 Q3. With regard to theterm 'shrinkflation', which of thefollowing
statement(s) is/are correct?
1. It refers to the reduction in the percentage value of inflation.
2. It helps manufacturers in saving more money in the long run.
3. Tackling shrinkflation will need a mix of macroeconomic policies to manage
demand and supply, as well as address structural rigidities in the economy.
Select the correct answer using the codes given below
(a) Only 1 (b) Only 1 and 3
(c) Only 2 and 3 (d) 1, 2 and 3
 Q4. The impossible trinity (also known as the impossible trilemma or the
Unholy Trinity) is a concept in international economics which states that it is
impossible to have three of the following at the same time:
1. A fixed foreign exchange rate
2. Free capital movement
3. An independent monetary policy
4. An independent fiscal policy
Select the answer using the codes given below :
(a) Only 1, 2 and 3 (b) Only 2, 3 and 4
(c) Only 1, 3 and 4 (d) Only 1, 2 and 4
 Q5. With referenceto the foreign trade, which of the following
statements rightly describe the “vostro account”?

1. It is an account that a domestic bank holds for a foreign bank in the domestic
bank’s currency.

2. It is an account opened by non-resident Indians who wish to

maintain a financial bank account in India.

3. It is an account hold by foreign trader with Indian bank to trade in bullion

4. It is an account maintained by MNCs working in India with Indian banks for

parent companies located in foreign tax jurisdictions.

(a) Only 1 (b) Only 1 and 3
(c) Only 3 and 4 (d)Only 2
Nostro and Vostro
accounts
On November 15, 2022, the government announced that nine special Vostro accounts have
been opened with two Indian banks after permission from the RBI.
The objective of these accounts is to facilitate trade in rupee in the wake of sanctions on
Russia by the US and European countries.

What is a Vostro Account?

A Vostro account is an account that a domestic bank holds for a foreign
bank in the domestic bank’s currency — which, in the case of India, is the rupee.

The RBI allowed nine such accounts, including IndusInd Bank and Uco Bank.
In the case of trade with Russia, payments in rupee for the export and import of goods will
go to these Vostro accounts.
The owners and beneficiaries of this money will be the exporters and importers in both the
countries.
What is a Nostro Account?

• Both Vostro and Nostro are technically the same type of account, with

the difference being who opens the account and where.

• So, if an Indian bank like the SBI wants to open an account in the United States,
it will get in touch with a bank in the US, which will open a Nostro account and
accept payments for SBI in dollars.
• The account opened by the Indian bank in the US will be a Nostro account for the
Indian bank, while for the US bank, the account will be considered a Vostro account.
• Literally, Nostro means ‘ours’ and Vostro means ‘yours’ in Latin.
• Therefore, the accounts opened by IndusInd and UCO are Vostro, and the ones
opened by Russia’s Sberbank and VTB Bank are Nostro accounts.
What led to the creation of these accounts?

• On July 11, 2022, the RBI put in place a mechanism to settle international
trade in rupees in order -
✔ To promote growth of global trade with emphasis on exports from India.
✔ To support the increasing interest of the global trading community in the
rupee.
✔ To thwart increasing pressure on theIndian currency in thewake of
Russia’s invasion of Ukraine and sanctions by the US and the EU.
 Q6. The Multi-dimensional Poverty Index developed by Oxford Poverty and
Human Development Initiative with UNDP support covers which of the
following?
1. Deprivation of education, health, assets and services at household level
2. Purchasing power parity at national level
3. Extent of budget deficit and GDP growth rate at national level
Select the correct answer using the codes given below:
(a) 1 Only (b) 2 and 3 Only
(c) 1 and 3 Only (d) 1, 2 and 3
Q7. ‘Global Innovation index”’ is prepared by the
(a) World Intellectual Property Organisation
(b) International Monetary Fund
(c) International Bank for Reconstruction and Development
(d) Organization for Economic Cooperation and Development
 Q9. With reference to windfall tax, consider the following statements:

1. It is levied when a company benefits from something that they are

not responsible for.

2. Under windfall tax, the governments, typically, levy a one-time taxover

and above the normal rates of tax.

3. It cannot be imposed retrospectively .
Select the correct answer using the codes given below

(a) Only 1 (b) Only 2

(c) Only 2 and 3 (b) 1, 2 and 3
 Q10. With reference to 'Society for Worldwide Interbank Financial
Telecommunication (SWIFT)', consider the following statements :
1. It is a messaging network used by banks and other financial institutions to
send and receive large amounts of transactional information such as money
transfer instructions
2. It is based in Washington DC and provides unique code to each financial
institution.
3. It is a ten character code, which identifies the bank, the country it’s in, where it’s
located in the country, and the branch.
Which of the statements given above is/are correct?
(a) Only 1 (b) Only 1 and 2
(c) Only 2 and 3 (d) 1, 2 and 3
Q11. A decrease in tax to GDP ratio of a country indicates which of the
following?

1. Slowing economic growth rate

2. Less equitable distribution of national income.

Select the correct answer using the code given below:

(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2
Q 12. In the ‘Index of Eight Core Industries’ which one of the following is given
the highest weight?

(a)Coal production
(b)Electricity generation
(c)Fertilizer production
(d)Steel production
Q13. The Fair and Remunerative Price (FRP) of sugarcane is approved
by the

(a)Cabinet Committee on Economic Affairs

(b)Commission for Agricultural Costs and Prices
(c)Directorate of Marketing and Inspection, Ministry of Agriculture
(d)Agriculture Produce Market Committee
Q14. Which one of the following issues the ‘Global Economic Prospects’
report periodically?

(a)The Asian Development Bank

(b)The European Bank for Reconstruction and Development’
(c)The US Federal Reserve Bank
(d)The World Bank
Q15. When the Reserve Bank of India reduces the Statutory Liquidity
Ratio by 50 basis points, which of the following is likely to be happen?

(a)India’s GDP growth rate increases drastically.

(b)Foreign Institutional Investors may bring more capital into our
country
(c)Scheduled Commercial Banks may cut their lending rates
(d)It may drastically reduce the liquidity to the banking system.
Q16. In India, markets in agricultural products are regulated under the

(a)Essential Commodities Act, 1955

(b)Agriculture Produce Market Committee Act enacted by states
(c)Agriculture Produce (Grading and Marking) Act, 1937
(d)Food Products Order, 1956 and Meat and Food Products Order, 1973
Q17. Convertibility of rupee implies

(a)being able to convert rupee notes into gold

(b)allowing the value of rupee to be fixed by market forces
(c)freely permitting the conversion of rupee to other currencies and
vice versa
(d)developing an international market for currencies in India
Q18. ‘Basel III Accord’ or simply ‘Basel III’ seeks to

(a)develop national strategies for the conservation and sustainable

use of biological diversity
(b)improve banking sector’s ability to deal with financial and
economic stress and improve risk management.
(c)reduce the greenhouse gas emissions but places a heavier burden
on developed countries.
(d)transfer technology from developed countries to poor countries to
enable them to replace the use of chlorofluorocarbons in
refrigeration with harmless chemicals.
Q19. With reference to Indian economy, consider the following
statements:

1. The rate of growth of Real gross Domestic Product has steadily

increased in the last decade.
2. The Gross Domestic Product at market prices (in rupees) has steadily
increased in the last decade.

Which of the statements given above is/are correct?

(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2
Q20. With reference to Indian economy, consider the following:

1. Bank Rate
2. Open market operations
3. Public debt
4. Public revenue

Which of the above is/are component/components of Monetary Policy?

(a)1 only
(b)2, 3 and 4
(c)1 and 2
(d)1, 3 and 4
Q21. With reference to inflation in India, which of the following
statements is correct?

(a)Controlling the inflation in India is responsibility of the Government of

India only
(b)The Reserve Bank of India has no role in controlling the inflation
(c)Decreased money circulation helps in controlling the inflation
(d)Increased money circulation helps in controlling the inflation
Q22. The problem of international liquidity is related to the non-
availability of

(a)goods and services

(b)gold and services
(c)dollars and other hard currencies
(d)exportable surplus
Q23. Which of the following is/are the indicator/indicators used by
IFPRI to compute the Global Hunger Index Report?

1. Undernourishment
2. Child stunting
3. Child mortality

Select the correct answer using the code given below.

(a)1 only
(b)2 and 3 only
(c)1,2 and 3
(d)1 and 3 only
Q24. There has been a persistent deficit budget year after year. Which
action/actions of the following can be taken by the Government to reduce
the deficit?

1. Reducing revenue expenditure

2. Introducing new welfare schemes
3. Rationalizing subsidies
4. Reducing import duty

Select the correct answer using the codes given below

(a)1 only
(b)2 and 3 only
(c)1 and 3 only
(d)1, 2, 3 and 4
Q25. In the context of which of the following do you sometimes find the
terms ‘amber box, blue box and green box’ in the news?

(a)WTO affairs
(b)SAARC affairs
(c)UNFCCC affairs
(d)India-EU negotiations on FTA
Q26. With reference to the International Monetary and Financial
Committee (IMFC), consider the following statements:

1. IMFC discusses matters of concern affecting the global economy, and

advices the International Monetary Fund (IMF) on the direction of its
work.
2. The World Bank participates as observer in IMFC’s meetings.

Which of the statements given above is/are correct?

(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2
Q27. Which of the following best describes the term ‘import cover’, sometimes
seen in the news?

(a)It is the ratio of value of imports to the Gross Domestic Product of a

country
(b)It is the total value of imports of a country in a year
(c)It is the ratio between the values of exports and that of imports between
two countries
(d)It is the number of months of imports that could be paid for by a country’s
international reserves
Q28. The term ‘Core Banking Solutions’ is sometimes seen in the news.
Which of the following statements best describes/describe this term?

1. It is a networking of a bank’s branches which enables customers to

operate their accounts from any branch on its network regardless of
where they open their accounts.
2. It is an effort to increase RBI’S control over commercial banks through
computerization.
3. It is a detailed procedure by which a bank with huge non-performing
assets is taken over by another bank.

Select the correct answer using the code given below

(a)1 only
(b)2 and 3 only
(c)1 and 3 only
(d)1, 2 and 3
Q29. The term ‘Base Erosion and Profit Shifting’ is sometimes seen in the news
in the context of

(a)mining operation by multinational companies in resource rich but

backward areas
(b)curbing of the tax evasion by multinational companies
(c)exploitation of genetic resources of a country by multinational companies.
(d)Lack of consideration of environmental costs in the planning and
implementation of developmental projects
Q30. India’s first ‘National Investment and Manufacturing Zone’ was
proposed to be set up in

(a)Andhra Pradesh
(b)Gujarat
(c)Maharashtra
(d)Uttar Pradesh
Q31. ‘Global Financial Stability Report’ is prepared by the

(a)European Central Bank

(b)International Monetary Fund
(c)International Bank for Reconstruction and Development
(d)Organization for Economic Cooperation and Development
Q32. Regarding ‘DigiLocker’, sometimes seen in the news which of the following
statements is/are correct?

1. It is a digital locker system offered by the Government under Digital India

Programme.
2. It allows you to access your e-documents irrespective of your physical
location.

Select the correct answer using the codes given below.

(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2